Agricultural Trade Integration in Western Balkans: Orientation and Complementarity

As guidance for the integration of Western Balkans (WBs) to EU is based on the lessons
learnt by the accession of Central and Eastern Europe countries in 2004 and 2007,
an important element for the prospects of WBs EU membership, is the regional trade
integration through the CEFTA2006 agreement. Since CEFTA2006 entry into force in
2007, agricultural trade among CEFTA2006 members as well as among Western Balkan
countries and EU members expanded significantly. EU countries constitute the destination
of almost half of Western Balkan agricultural exports. In this context, this study
attempts firstly to evaluate the degree of sectoral and geographical dispersion of six
selected Western Balkan countries and CEFTA2006 members’ agricultural exports,
namely Albania, Bosnia & Herzegovina, Croatia, Montenegro, FYR Macedonia and
Serbia and secondly to assess the extent of agricultural trade complementarity between
Western Balkans and EU countries. The study, utilizing the latest available agricultural
trade data (classified by the Combined nomenclature at two digit level) for the period
2007-2012, identifies twenty four agricultural sectors (C codes 01-24) in order to construct
three trade indices, namely Regional Hirschmann, Sectoral Hirschmann and the
Trade Complementarity Index. Calculations indicate that among Western Balkan countries,
Serbia and FYR Macedonia displays the utmost geographical distribution of their
agricultural exports, while Bosnia-Herzegovina and Montenegro exhibit the greatest
sectoral exports dispersion. As it concerns the complementarity of Western Balkans agricultural
exports to EU markets, overall, neighboring EU members are not calculated
as favorable towards agricultural exports, while orth-Western EU countries like
Finland, Germany, UK or France are displaying greater potentials as future exporting
markets.